Mistakes are made

Tuesday, November 29, 2005

Not True that Public Health Emergencies Necessary for Compulsory Licensing of Patents

James Love

In the controveries over compulsory licensing of patents on medicines, news editors, reporters, students, academic researchers and others repeat the untrue assertion that the WTO TRIPS agreement provides for the compulsory licensings of patents only in cases of public health emergencies. This is not true. The TRIPS is quite flexiable in terms of compulsory licensing of patents, and indeed, one observes compulsory licensing in a wide range of situations, including for example compulsory licenses on tow truck patents in the US, mandatory compulsory licenses of patents on seeds in Europe (for plant breeders), on satellite technologies, and a countless other things.

The most accessible discussion of the TRIPS rules on compulsory licensing of patents for health care inventions is the WTO's recent FAQ on this topic.

Why do news reporters and editors so frequently misstate the nature of international law on this topic? In part because they tend to follow earlier reports on the same topic, dating back to Merril Goozner's April 28, 1999 headline story in the Chicago Tribune titled Third World Battles for AIDS Drugs, which had this quote:

While the World Trade Organization jealously guards intellectual property rights among its member nations, its global rules of trade do allow for what is known as "compulsory licensing" if it is done to combat a national emergency.

Merrill’s widely emulated quote was technically correct, but misleading. The WTO rules on national emergencies only address procedural issues, such as the ability to waive prior negotiation (on reasonable commerical terms) with patent owners before a compulsory license is issued. In fact, this is just one of three cases where such prior negotiation can be waived under the TRIPS -- the other two are for non-commerical public use or when the compulsory license is a remedy to anticompetitive practices. And, when there is prior negotiation with patent owners for a voluntary license, governments are free to override the exclusive rights and authorize others to use the patent for any other reason -- with a few conditions, including the normal obligation that the patent owner receive adequate remuneration.

Much of the confusion and missreporting about the TRIPS rules concerns the subtle ideology that surrounds patents rights. People are conditioned to think that patents are something to be "respected" or "honored," and that only extraordinary circumstances would justify "breaking" the patent monopoly. There is also a certain amount of prejudice associated with the perceived need for the poor to respect the property rights and privleges of the rich. When developing countries threaten to issue a compulsory license to a patent, it strikes at this larger issue. Meanwhile, the US government often uses compulsory licenses to remedy antitrust cases (such as the compulsory license on Microsoft Windows protocols), or for government procurement, without much fanfare.

In Europe, it is quite common for national patent laws to have strong compulsory licensing provisions, including areas where the compulsory licensing authority is stronger for certain areas of public interest. For example, the French patent law has strong language on compulsory licensing of patents on medicines, as well as for in-vitro diagnostic patents, which was motivated by disputes over the Myriad patents on breast cancer screening technologies. The European Commission also adapted a directive on biotechnology that requires mandatory compulsory licensing of patents on genetically modified seeds, when a plant breeder seeks to make improvements on the patented invention.

More recently, the US government has become alarmed that it may lose access to the Blackberry wireless service for reading email, and is searching for ways to effectively obtain a compulsory license on that technology, and eBay, is attempting to obtain a compulsory license on patents involving business method patents.

Compulsory licensing of patents is an important way for all governments to protect the public interest and to control anticompetitive practices. They are of course important for public health emergencies, but they are important for lots of other things too.